The Frugal Billionaires

byFrugalTraderonDecember 2, 2008

The title sounds like an oxymoron, but there are frugal billionaires out there. I always knew that there were a number of billionaires that lived well below their means, but never to the extent that an article in the Financial Post points out.

It goes to show that these billionaires did not gain their billions for the purpose of gaining material things. They are wealthy because they are successful from loving what they do.

Below are some frugal billionaires and some examples of their relative frugality:

Warren Buffett

As one of the richest men in the world (he bounces around the top 3), you would expect that he lives a relatively extravagant lifestyle. Quite the opposite, Mr. Buffett still lives in his 1958 $31,500 home, eats burgers and drinks Cherry Coke. That’s not to say that Mr. Buffett doesn’t have a few luxuries such as a private jet.

Ingvar Kamprad

Mr. Kamprad is the founder of the well known furniture store “Ikea”. Even though he is worth approximately $31 billion he still wears very casual low cost clothing along with decorating his home with low cost furniture from his store. In addition, he still drives a 1993 Volvo!

Azim Premji

This technology mogul, who is worth over $12 billion, is yet another example of being frugal in spite of his extreme wealth. In addition to living in a modest bungalow, Mr. Premji drove a Ford Escort for 8 years before trading it in for a upgrade. What was the upgrade? A Toyota Corolla! When he travels for work, he flies coach along with staying at budget hotels.

If we look at networth to expense ratio, these guys take frugality to a whole new level. Question for you, do you think that you would be this frugal if you had billions of dollars at your disposal?

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About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

I dunno if I’d fly economy the rest of my life if I had billions, but likely the rest of my lifestyle wouldn’t change much. You can only realistically spend so much money on material items before you get bored.

I know I would definitely do more charitable work. Likely if I had a billion or two I’d recruit a number of blogging peers to start a foundation where each individual was responsible for active trading (for a salary) and then proceeds were donated to responsible charities or good causes. That’s really my dream job regardless of how much wealth I accumulate in life. Investing for a good cause and making a difference because what else can you really do with more money than you know how to spend?

Although I like the “nice things” in life, I don’t think I’d be too extravagant. I admit I like luxury things when I travel, but I dislike the pretentiousness that often comes with it. If I were a billionaire, I’d likely make upgrades to where I eat and my home. No need for a private jet, multiple cars or a designer wardrobe, thanks.

I think that this is due to the fact that some successful people feel bad that they have so much money while their friends don’t. If I were a billionaire I would be living a flashy celebrity lifestyle, going from Paris to Tokyo to New York in my jet, surrounded by top models :-)

I’d do the same thing I do now – look for value. I’d gladly fly economy on flights that only last a few hours, as the increase in cost isn’t worth it. If I was flying for 12+ hours though? Upgrade to business/first for the leg and elbow room as well as a better place to sleep.

And I’d take the hotel room that suited my needs… why get the presidential suite when you’ll be conscious in the room for about 3 hours total? A decent bed and clean room.

No reason to move from my condo unless I need the space for family. The first thing I think when looking at a house is “how much does it cost to heat this thing?”

I might not drive a Corolla if I was a billionaire, but I doubt I’d have a Ferrari either. Something comfortable, fuel efficient, and reliable that I like the look of.

But I’d probably make up for the frugality by spending money on family and friends. Even now if I throw a party, I require my guests to bring nothing but themselves. I imagine that would get more extravagant. I’d have no qualms about paying for hotels or airline tickets so friends could come on trips with me if they’re strapped for cash. Christmas and birthday gifts would also be much nicer.

I’d still go to work…although I probably wouldn’t care too much about being let go and if my boss gave me grief, I’d buy the company and become his boss.

Seriously, I’d start up a technology challenge, similar to the one which led to the plane that could take off, fly to the limit of the atmosphere and return. We need to keep the big corporations on their toes. It’s what the world needs now, more support for innovation and ideas.

Ok…If I had a billion dollars…..I could see myself living similar to how Warren Buffet lives….I don’t need a huge house just enough space for me and a small family….but with my billions I would definetly take advantage of a private jet…..A luxury that would be worth it if you could afford it….

I might not drive an Escort for eight years but a nice Toyota Camry or Lexus would be nice…..thats about it…..

I would definitely want to change my lifestyle but I wouldn’t do it for show. Yes, I would get a bigger house with more ‘stuff’ but it wouldn’t be some 40 room mansion.

It occurred to me a while ago that if you have little kids and a reasonable standard of living, then having a ton of $$ won’t matter too much. Travelling is too much hassle and you are very limited in your activities. I would definitely get a nanny or two but I’d still want to spend a lot of time with the kids.

I’d be living it up! I’d have a mansion here, a top floor luxury condo there, an island in at least two major seas (I’m thinking Caribbean and Mediterranean), a 200 foot long yacht, and a private plane (not a Lear jet, maybe a 737 – something with head room).

I’d live life and spend it all; I’d want the last cheque I ever wrote to bounce.

But alas… I’m very happy with what and who I’ve got (the who I’ve got part being the most important – I wouldn’t trade that person for any of the stuff I listed above). It’s not about how much money you’ve got, it’s about who you spend it on :)

I once read somewhere that Buffet said that a custom tailered suit looks the same as one off the rack on his body. A coke tastes the same for a billionaire as a person on welfare. But he said the one difference that is worth the money is a private jet.

The difference is, everyone is talking as if the billions would be thrust upon their bank accounts like a lotto windfall. The frugal billionaires listed here all MADE their billions with their brains; they didn’t WIN their billions with a scratch-n-win ticket last Tuesday.

As we all know, things have a very different hue of value when they are earned rather than acquired for free. Who here cherishes all those free advertising flyers stuffed in your mail box every week? Thought so.

Frugality and excessiveness are just extensions of our personalities. There are frugal and excessive people in all walks of life: MC Hammer blew all his rap money and wound up bankrupt; Vanilla Ice invested with intelligence and still has a lot of money.

I think whatever type of person you are now, earning billions of dollars more would only magnify those traits (eg. Trump).

Me, I would shop for quality. Buy it once and have it last a lifetime or three. I already despise Wal-Mart (people die there!), I couldn’t really see myself going there if I was uber-rich. I would hire people to take care of all my “chore” type duties that really eat up time, because after all, time is money.

I’d buy a nice piece of land and surround myself with family and friends… but then, that’s what I’m aiming toward doing anyways. Nothing extravagant. I would travel a bit more if I had billions, though, and take (certain) friends and family along with me for company.

I think having a ton of money would be a huge burden. If I had those riches I’d hope to be able to either give most of it away or hide it so no one knew about it. I’ve read enough horror stories of things that happen to lottery winners, it changes everyone around you. You could end up not trusting anyone as it’s so easy for your money to influence others. I assume the same could be true for self made millionaires as well. I’d be pretty happy never discussing it, just living a very comfortable life, still doing a job I enjoy, having freedom to try new things and never worry.

It depends…
If I worked for years to earn the billions, I may not have even noticed that my net worth and disposable income have increased.

If I was awarded the billions, having never had even a million, I would spend the money on things haphazardly. Inexperience and unfamiliarity would guide my spending.

Being older now, I have become comfortable with my lifestyle. I have found a contentment for what I now have. If extra comes in for a given month it goes into savings, even if $10 or $100 (and I suppose even if $1B).

One other point… The billionaires listed here have become billionaires by focusing their time on the income side of the equation, just as much as the frugal outflow side.

If money changes who I am, then I better figure out who I am first. Money comes and goes, and sure it can be used for a lot of good, but saying that- we are the richest culture in the world and yet what are we doing but continuing to get more. We say we would do charitable work- why not do it now- say we would help the poor, why not now- why wait for the billions?

I know of a very senior citizen (near 90) who owns a hotel and many apartment buildings and land…let’s just say he’s worth a LOT. So he stops in Reno on his way down to Arizona for the winter (more real estate holdings there). He plays a slot machine and wins $30,000. Very nice. He takes one step over and plays the slot machine next to it. He wins $45,000! I’m not making this up. Of course, he only gets to walk away with half of that — Nevada tax-man keeps the other half. This ‘loss’ of (basically) free money makes this old rich guy angry. He comes home to Canada and hires lawyer to get ‘his’ money back (it’s a US/CAN tax thing).

Instead of being happy with (economically unneeded) winnings of $38K to add to his already multi-millions, he goes after the whole $75K (still economically unneeded for him). I would go after it too, but that’s a nice chunk of change for me!

I’m sure he’s a bulldog of a businessman. He also eats at cheap diners instead of fancy $18 burger restaurants.

LIke to note what most people dont understand about Frugal Billionaires
“Money control You” or You control Money”
its not about getting rich then blowing it, it DISTORT the truth of life.

money has this thing about distorting truth and perpective, we prostitue ourselves for money when normally we shouldn’t
Im guilty of this getting excited for getting overtime( this is not a normal reaction but i do it all the time)

Understand your lifestyle needs, then apply the level of money needed at the appropriate time.

Biggest money lesson i learn was balance it all, and make sure you control money and make sure money never control you.

For anyone who was talking about a huge shopping spree.. it would have seem money controls u, not judging to condem.

Scott has it bang on. These billionaires are unique minds, sucessful because they worked incredibly hard to earn their fortunes. They don’t think like Joe Six-Pack who would buy vacation homes, a Ferrari and fly around the world with supermodels on his arm. Anyone notice how these guys are still working actively when they could have retired years ago with huge fortunes? They are driven by their work and their businesses in which they are personally invested both financially and emotionally. Buffett doesn’t spend six months a year in Antigua sipping daiquiris… even though he could.

The super rich people like these billionaires need to help the economy going by BUYING or spending. To keep their used cars for decades doesn’t help the car industry. The same holds true with the housing industry, like Warren Buffet couldh help boost the housing industry if he bought himself a modest house at this point and time when the housing industry is so down.

Life is short, I don’t mean we need to be spending every cent we worked hard for, but by gosh, these billionaires cannot take with them their wealth when they die. Besides, what’s a $40,000 worth of new car or a brand new $500,000 house in a nice suburban subdivision that they could cough out compared to the billions they have in the bank.